FOR NEARLY a half century after the 1857 Revolt there were massive inflows of private British capital into the Indian economy. Much of it was invested in different kinds of public works, a substantial portion going into railway construction by private joint stock companies under what was known as the guarantee system. The government undertook ''to pay dividends to the shareholders of the companies at the rate of 5 per cent per annum. Most of the important Indian railways were constructed under the guarantee system in the second half of the nineteenth century. Although its beginnings could be traced back to as early as 1846, it remains true that the progress of the construction work was unsatisfactory till the reign of the first Marquess of Dalhousie. Dalhousie's tenure as chief administrator was marked for its contribution to the development of public utilities. Railways apart, his other important achievement was to establish a posts and telegraphs system.

Other than railways, and posts and telegraphs, a notable construction work of the second half of the last century was in the field of irrigation. The modernization of the irrigation system remained utterly neglected all along. The growing awareness of this need found an articulate expression in the general tenor of the nationalist compaign. During the period under consideration the Indian economy was primarily